ACCT 540

Corporate Formations Problem

Mary and Todd form the MT Corporation, with a transfer of the following properties:

Mary$1,200,000 cash

Todd$800,000 FMV property

$300,000 tax basis

Mary will receive 60% and Todd 40% of the corporate stock.

Complete the following

MaryTodd

Realized gain________________

Recognized gain_________________

Basis of Stock__________________

MT basis in contributed asset___________________

VARIATION 1:return to original facts (no Karla).Todd's property is valued at $1,100,000 but is contributed subject to a $300,000 liability.

Complete the following

MaryTodd

Realized gain________________

Recognized gain_________________

Basis of stock__________________

MT basis in contributed asset___________________

VARIATION 2:Same as Variation 1 except Todd's property is valued at $1,200,000 and is contributed subject to a liability of $400,000.